All posts tagged New York Stock Exchange

Blue chips were about 100 points from their all-time highs at midday Friday. But yesterday, as the Dow industrials came less than 20 points of a record, traders said it was difficult to understate the psychological significance of hitting a new peak.

“Prices drive sentiment, and sentiment is the true driver of this market, more so even than earnings,” said Mark Newton, chief technical analyst at Greywolf Execution Partners, a trading firm on the NYSE floor.

A record high for the Dow Jones Industrial Average, the oldest and most widely followed stock benchmark, would resonate in ways other market developments can’t, traders said. They suggested the psychological significance of the milestone could help perpetuate gains.

A New York Stock Exchange server outage interrupted the delivery of trade data on dozens of stocks for about an hour Tuesday, according to the exchange.

The episode was the latest disruption of reporting to the so-called consolidated tape, the record of securities transactions across all U.S. exchanges. Financial firms, news agencies and regulators rely on the consolidated tape to track market activity, though exchanges also sell direct data feeds that provide more detailed information. A similar outage also affected Nasdaq-listed stocks last week.

Some in the options market look set to win big on the NYSE merger–unsually large, unusually constructed options trades are poised to bring in $6.8 million to whoever set them up.

The bet, established in three parts on Dec. 6, 7 and 17, became hugely profitable after NYSE Euronext and IntercontinentalExchange Inc. announced a deal Thursday, causing NYSE shares to skyrocket.

“This looks like suspicious trading. It is odd to see volume and ‘open interest’ build up in the days before a takeover bid,” said Ophir Gottlieb, managing director of client support and algorithmic trading at options-data firm Livevol Inc. Open interest refers to the total number of contracts outstanding. Each contract represents a bet on 100 shares of stock.

“The New York Stock Exchange has to adapt to new times, and this merger may be just the thing that gives it a chance to grow. Mr. Sprecher and Mr. Niederauer have assured me that they will keep the floor open and in New York, expand their derivatives business here, and have dual headquarters here and in Atlanta. I am also pleased they will keep the New York Stock Exchange name and protect the brand.”

Last year Schumer, a politician from New York state whose opinion is closely watched, had lukewarm feelings about NYSE’s planned tie-up with Deutsche Börse AG, which ultimately fizzled after failing to get regulatory approval.

NYSE Euronext shares are soaring on news that the Big Board operator will sell itself to IntercontinentalExchange in an $8.2 billion deal.

Shares recently rose 33% to $32, although the stock remained below the offer price of $33.12, suggesting there’s some skepticism over whether the deal will actually get done. ICE’s offer comes after several merger bids in the exchange industry failed within the last few years.

In addition, shares of Nasdaq OMX Group are up more than 3%, another move that suggests investors are positioning for additional consolidation within the exchange industry.

Geoffrey Rogow and Steven Russolillo report on the deal, the market’s reaction and more on Markets Hub.

The big question on traders’ minds following the ICE-NYSE deal: What will happen to the floor of the New York Stock Exchange?

NYSE Euronext agreed to sell itself to rival IntercontinentalExchange for about $8.2 billion, a deal that would end more than two centuries of independence for the NYSE. ICE has said it would preserve the NYSE brand. But details remain light at the moment, prompting some trades to speculate about what could happen next.

The Big Board had been the U.S. stock market’s dominant exchange for decades. But the exchange began to draw significant competition in the 1990s with the emergence of all-electronic rival Nasdaq Stock Market, along with new rules that allowed shares to be traded more freely across multiple venues.

MarketBeat got in touch with a few of the traders down on the floor of the NYSE. Here are their reactions.

IntercontinentalExchange has announced it has agreed to acquire the iconic U.S. bourse NYSE Euronext, in a deal that would create one of the largest global exchange groups.

The Atlanta-based ICE, which is best known as a commodities marketplace, announced a cash-and-stock-deal before the U.S. market open today which valued NYSE Euronext at $33.12 a share, or $8.2 billion.

In a statement, ICE said the merger would create “a premier global exchange” covering markets across “agricultural and energy commodities, credit derivatives, equities and equity derivatives, foreign exchange and interest rates.” The deal is expected to close in the second half 2013, subject to regulatory approvals in Europe and the US and approval by shareholders of both companies.

The deal mirrors ICE’s joint $11.3 billion counterbid with Nasdaq OMX (NDAQ) last year to purchase NYSE Euronext, in an attempt to scupper NYSE’s deal with German operator Deutsche Boerse (DB1.XE). ICE would have acquired its rival’s derivatives assets as part of the deal, including Liffe, while Nasdaq would have taken on NYSE Euronext’s equities business. However, the deal was scrapped on competition grounds following discussions with the antitrust division of the U.S. Department of Justice.

Duncan Niederauer, CEO of the New York Stock Exchange’s parent company NYSE Euronext, said he finds it “hard to imagine” that the exchange would be open tomorrow.

A final decision over whether to keep the markets closed through Tuesday will likely be made in the middle of the day today and hinge on the severity of Hurricane Sandy. A more likely scenario would be to reopen on Wednesday, which is the last day of the month and options-expiration day.

If the markets were to be closed on Tuesday, it would mark the first time since 1888 that weather-related issues would close the market for multiple days. Back then a blizzard slammed New York City, prompting a two-day shutdown.

As Knight Capital Group grapples with the aftermath of the trading glitches, the debut of NYSE Euronext’s new trading program has been thrust into the spotlight.

On Bloomberg TV this morning, Knight CEO Thomas Joyce said new Knight software prepped in advance for this program was to blame for the trading woes, though he was careful not to blame NYSE.

NYSE’s “Retail Liquidity Program” allows market makers, like Knight, to offer stock prices for retail investors that are fractions of a penny better than the going market rate. The program mimics how dark pools and other wholesalers operate and is aimed at bringing order flow back to NYSE and increasing overall liquidity.

The NYSE proposal—called the “Retail Liquidity Program”—works along the same lines as the dark pools that trade large blocks of shares for institutions. Dark pools are private platforms set up for anonymous stock trading.

For example, if a doctor trading stocks from his home office wanted to sell 100 shares of Sirius XM Radio Inc. at the bid price of $1.85 a share, a tenth-of-a-cent improvement on the NYSE would see his order filled for $185.10, instead of $185.00.

When the market opened Wednesday, traders on the New York Stock Exchange floor say they knew that something wasn’t right.

“From the buzz on the [trading] floor, it was clear something was up,” said Mike Shea, managing partner with Direct Access Partners.

Almost 150 stocks had started changing hands with unusually large price swings and high volume. Knight Capital Group (KCG), a prominent brokerage, said shortly afterward that it was probing software problems.

Floor traders, who have dwindled in number with the rise of electronic trading, cited what they saw as a relatively quick response to the problem, which most attributed to a glitch in an electronic trading algorithm. The Big Board is seen as among the last of its breed with floor traders trafficking shares, in contrast to automated exchanges where trading exists only in computer networks.

“Part of what made this less of a disaster is that human beings are here,” said Kenneth Polcari, managing director with ICAP, a brokerage firm. ”Rah rah for the little guy, who happens to be me.”

From the Dow Jones Newswires story by Andrew Ackerman and Jacob Bunge:

WASHINGTON–The Securities and Exchange Commission on Thursday approved a New York Stock Exchange initiative to lure retail investors with more-favorable prices than they would otherwise get by trading with an exchange.

Under the 12-month pilot initiative, called the Retail Liquidity Program, the Big Board becomes the first U.S. stock exchange allowed to offer retail, or individual, investors a better price–sometimes as little as a 10th of a penny higher or lower, depending on the transaction, than those available to institutional investors such as pension funds and hedge funds.

The NYSE program works along the same lines as “dark pools” that trade large blocks of shares for institutions. Dark pools are private platforms set up for anonymous stock trading.

NYSE Euronext has some pretty strong words against Nasdaq OMX’s plan to compensate financial firms that lost money during the bungled Facebook IPO.

The Big Board operator doesn’t mince words when describing Nasdaq’s plans, claiming compensation to victims would be “wholly inconsistent with fair practice” and “puts undue burden on competition.” The issue centers around the approximately $27 million in funds that would come from trading discounts offered by Nasdaq.

NYSE claims such efforts are tantamount to “subsidizing Nasdaq’s missteps.”

Here’s the NYSE statement (MarketBeat’s emphasis included):

We have yet to receive full details of NASDAQ’s plan. However, we believe it would be wholly inconsistent with fair practice and an undue burden on competition to allow NASDAQ to use pricing and other machinations as a guise for fairly compensating those impacted by the Facebook IPO issues. Such a tactic would potentially strongly incent customers to divert order flow to NASDAQ in order to receive compensation to which they are entitled, and allow NASDAQ to reap a benefit from market share gains they would not have otherwise received. This is tantamount to forcing the industry to subsidize NASDAQ’s missteps and would establish a harmful precedent that could have far reaching implications for the markets, investors and the public interest. We intend to strongly press our views that NASDAQ’s proposal cannot be allowed to permit an unjust and anti-competitive situation.

The chief executive of Nasdaq OMX Group said his company is still in talks with Facebook Inc. about the social-media company’s highly anticipated stock listing, and that Nasdaq still hasn’t presented its “complete” package to Facebook.

While Nasdaq OMX Chief Executive Bob Greifeld said he cannot shed light on whether his exchange will ultimately land Facebook’s stock listing when it files to go public, he said talks are ongoing.

“We obviously are soliciting interest from Facebook and we look forward to having the opportunity to present our complete package,” Greifeld said in an interview on Wednesday.

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MarketBeat looks under the hood of Wall Street each day, finding market-moving news, analyzing trends and highlighting noteworthy commentary from the best blogs and research. MarketBeat is updated frequently throughout the day, helping investors stay on top of what’s happening in the markets. Lead writers Paul Vigna and Steven Russolillo spearhead the MarketBeat team, with contributions from other Journal reporters and editors. Have a comment? Write to paul.vigna@wsj.com or steven.russolillo@wsj.com.

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